WorldBank and EBRD Study of Bribery and Corruption in Transition Countries and SCG: The Government is More Corrupt than the Civil Servants

30 September 2004

Serbia and Montenegro provide a very favourable environment for the so-called high corruption which is used, according to the Study prepared by the World Bank and the European Bank for Reconstruction and Development (EBRD), to measure the level of bribes taken by the judges, parliamentary representatives, government ministers and other holders of office, in order to adopt bad decisions, laws and regulations.

Among the 26 countries in transition included in the Study, only Macedonia, Bosnia and Herzegovina, Bulgaria, Tajikistan and Albania have higher levels of "high" corruption than SCG. SCG received 0.6 index ratings on the scale of 0 to 1.

The Report, which analyses the positions in the enterprises and the commercial sector, considers different aspects of corruption, its scope and the impact on the business environment.

The Report pays special attention and evaluates separately the so-called “small” or classic administrative corruption (for individual cases and services) and the “big” corruption which reaches to the very core of the State, and influences the adoption of partisan decisions, administrative acts and whole Laws and regulations.

Based on the responses by the enterprises on the administrative corruption as an obstacle to the development of business, SCG is rated 10th among 26 transition countries, with index ratings of 2, on the scale of 1-4. However, SCG’s ratings in the “big” corruption are much worse, having in mind that it is rated 21st of 26 countries included in the Survey.

The Survey exposes a clear link between the “small” and the “big” corruptions, which interact, mutually enhance each other and multiply the damages to the development of normal business and the country in general.

The World Bank/EBRD Survey registered significant lag for SCG, in terms of the judicial realization of commercial contracts and with the bankruptcy procedures, i.e. liquidation of bankrupt enterprises.

There is, also, a noticeable delay of the reforms in the financial sector.

Regarding the court realization of commercial contracts, the problem lies with the complicated legal procedures. With its 40 required steps (compared to the European average of 25 steps, SCG is rated 105th among 129 analyzed economies in the world. The situation is even worse in terms of the longevity of the procedures: with 1,028 days on average, SCG is second worst in the world. Only Guatemala’s rating is worse, dead last on the list. Nonetheless, it should be said that some former socialist countries that have entered the EU last may don’t rate much better than SCG (in Slovenia, the procedure takes 1,003 days, in Poland 1,000 days).

Equally bad, if not worse, is the situation with the liquidation of companies and enterprises and the bankruptcy procedures. With an average of 7.3 years from the start to the end of the procedures, SCG is rated 107th in the world, out of a total of 112 analyzed economies. Only Mauritania, the Czech Republic, Brazil, Chad and India trail SCG in that regard. Also, the greatest costs of the bankruptcy procedure fall on the costs of judicial procedure, amounting to 38% of the total bankruptcy funds.